For years, American banks have been rejecting American clients

US banks don’t want US clientsAdmittedly, «certain American banks in Switzerland have been following a policy of rejecting US clients for years».

The CEO of a large financial institution in Geneva anonymously confirmed this: He himself, a US citizen, was rejected by Morgan Stanley in Switzerland. The main reason wasn’t so much the fear of of the IRS and the US Department of Justice, but rather a central policy of preventing the private banking business from being cannibalized by offshore branches in Switzerland.

In other words, it is quite possible that US banks in Switzerland will be untouched by the tax conflict between the US and Switzerland, but due to various reasons.

US Program: Foreign banks profitSwiss banks are stuck in the US-tax pillory. US institutions, on the contrary, are taking the situation in a relaxed manner.

Banks with no relation to the US legal conflict are at an advantage. This is why J.P. Morgan can only win, says Andrea Tardy, the managing director of the American bank to the economic paper «L’Agefi».

The Geneva branch is the second largest private banking unit of the bank after New York, yet it in Switzerland it focused on the local offshore market, wrote «L’Agefi».

15 thoughts on “For years, American banks have been rejecting American clients”

A. The short answer is ‘When you need it.’ Gold, first and foremost, is wealth insurance. You cannot approach it the way you approach stock or real estate investments. Timing is not the real issue. The first question you need to ask yourself is whether or not you believe you need to own gold. If you answer that question in the affirmative, there is no point in delaying your actual purchase, or waiting for a more favorable price which may or may not appear. Cost averaging can be a good strategy. The real goal is to diversify so that your overall wealth is not compromised by economic dangers and uncertainties like the kind generated by the 2008 financial crisis, or those now unfolding in Europe and Japan.”

Comment, we are the persecuted Jews of this generation and need to realize that after WW2 was over the USA gave safe haven to scores of high level Nazis as confirmed by this New York Times article.http://www.nytimes.com/2010/11/14/us/14nazis.html?pagewanted=all&_r=0
Many also don’t realize that George Bush’s grandfather, the late US senator Prescott Bush, was a director and shareholder of companies that profited from their involvement with the financial backers of Nazi Germany.

The reason this information is important to readers although uncomfortable to read is so that people will take off their blinders and see what has really happened in the USA over the decades, mostly unnoticed by Joe and Jill 6Pack. It’s far worse than most people know. Don’t believe this? Did you know that Arnold Schwarzenegger’s father was Gustav Schwarzenegger? Arnold says he denounced him and fair enough but the point is many ex-nazis and affiliates saturate our society. “Go ahead, make my day”
Please notice the belt buckle proudly displayed on the cover or Time Magazinehttp://content.time.com/time/covers/0,16641,20070625,00.html

The Bank Secrecy Act of 1933 prohibits foreign institutions from marketing US investment products to US persons. The definition of US persons has been more firmly established (retroactively back to the civil war citizenship based taxation statutes) and all foreign firms comply.

Today, US financial markets cannot sell products locally in foreign locations to a population of 7.6 million citizens, and ccountless other “persons”. Stupid old law that Congress doesn’t remember, yet all foreign institutions remember. Hence they cut out a potential market of 7.6 million (less a few who might still be able to buy securities from their providers in the Homeland).

Stupidly written law, knocks out a potential market segment of 7 million + persons.

@NotThatTara – Thank you for posting this. I lived in Switzerland for more than a decade and will be returning there. This is the first bit of good news I have heard from the banks.

I have been furious since I saw that Migros Bank had entered into the OVDP for banks. I just do not understand how a basically local bank could need to be in OVDP. I strongly doubt they were out recruiting High Net Worth Americans like UBS was. It was clear that Migros decided to play along just to get the US off their backs. It felt like a true case of US bullying to me.

Anyway, reading the article made me understand the approach Migros took and these were the first encouraging words that I have heard from Swiss banks with respect to American clients.

I know people who were accidental Americans born in the US during WWII who returned to CH over 70 years ago and never went back to the US who were turned over to the IRS by their banks because they had done well and had high balances. Their dual citizenship did not matter. I also had an account closed. Another friend has been refused mortgages at several banks. His mortgage is now solely in his wife’s name. So this news is extremely welcome.

@Not That Lisa!:
An Economist article in Dec 2013 explained a key element in the “US Programme”, which is why Migros Bank and other retail banks in Switzerland likely joined Category 2:
“The programme does not distinguish between banks that willingly catered to tax dodgers and those that inadvertently served them. As a result, banks that believe they are clean but cannot be certain may join category two to be on the safe side.”

The “those that inadvertently served them (tax dodgers)” is also an overstatement. Banks, and especially retail banks with their thousands and thousands of customers, don’t know if a USP customer is compliant. To be safe, they classified themselves as Category 2 to avoid US DOJ prosecution. The DOJ is holding a gun to their head and it is best to pay rather than risk being shot dead.

@Uncle Tell – Thanks. Very alternative. Actually, UBS will still serve existing US Person clients in interest bearing accounts only after you sign an agreement that your data can be turned over to the IRS. I think keeping your account might also depend on how big your deposits with them are, but I am not sure about that. I have never seen any written policy on that. I have not yet heard anything about Credit Suisse asking US Persons to sign statements that they agree that the bank can turn over their data to the IRS. Any news from that bank?

@Uncle Tell Having read the link they seem to be applying the “Local Client Base Exception.”

It looks like for all customers they are serious in their AML responsabilities, unlike most financial institutions in the USA which seem to consider AML a joke. But the US is the biggest tax haven on earth.

It is also good to see the stand they took because it may help provide an example to other local client base institutions elsewhere in the EU.

I understand your reasoning behind “don’t ask don’t tell” but that is no way we should have to live. I assume you are Swiss/German/French and that is all which should matter to anyone.

I could be wrong but I thought I read that Category 2 provides banks with “non-prosecution agreements,” whereas Categories 3 and 4 provide only “non-target” letters. If that is correct, there is clear incentive for banks to go for category 2 in order to obtain non-prosecution agreements thus closing the issue of US tax headaches once and for all. Whereas, non-target letters allow the issue to be reopened in the future if new information about account holders pops up.

Its like when an innocent man confesses to some minor crimes to pacify the prosecutor just to end the misery of never ending court appearances and compounding legal fees.

Or like waterboading somebody and they confess to stuff they never did just to stop the torture.

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